Question :
147. Fortune Drilling Company acquires a mineral deposit at a cost : 1258020
147. Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. What journal entry would be needed to record the expense for the first year assuming 418,000 tons were mined?
A. Debit Depletion Expense $1,233,100; credit Accumulated Depletion $1,233,100.
B. Debit Amortization Expense $1,358,500; credit Accumulated Amortization $1,358,500.
C. Debit Depreciation Expense $1,358,500; credit Accumulated Depreciation $1,358,500.
D. Debit Depletion Expense $1,358,500; credit Accumulated Depletion $1,358,500.
E. Debit Depreciation Expense $1,233,100; credit Accumulated Depreciation $1,233,100.
148. Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. Compute the depletion expense for the first year assuming 38,000 tons were removed.
A. $98,333.
B. $93,158.
C. $38,000.
D. $12,881.
E. $112,100.
149. Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. What journal entry would be needed to record the expense for the first year assuming 38,000 tons were removed?
A. Debit Depletion Expense $112,100; credit Accumulated Depletion $112,100.
B. Debit Amortization Expense $112,100; credit Natural Resources $112,100.
C. Debit Depreciation Expense $93,158; credit Accumulated Depreciation $93,158.
D. Debit Depletion Expense $93,158; credit Accumulated Depletion $93,158.
E. Debit Depreciation Expense $98,333; credit Accumulated Depreciation $98,333.
150. Phoenix Agency leases office space for $7,000 per month. On January 3, Phoenix incurs $65,000 to improve the leased office space. These improvements are expected to yield benefits for 8 years. Phoenix has 5 years remaining on its lease. Compute the amount of expense that should be recorded the first year related to the improvements.
A. $20,000.
B. $6,000.
C. $13,000.
D. $65,000.
E. $8,125.
151. Crestfield leases office space for $7,000 per month. On January 3, the company incurs $12,000 to improve the leased office space. These improvements are expected to yield benefits for 10 years. Crestfield has 4 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?
A. Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200.
B. Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000.
C. Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200.
D. Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000.
E. Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000.
152. Ngu owns equipment that cost $93,500 with accumulated depreciation of $64,000. Ngu asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.
A. $3,500 loss.
B. $5,500 gain.
C. $5,500 loss.
D. $3,000 gain.
E. $3,500 gain.
153. Gaston owns equipment that cost $90,500 with accumulated depreciation of $61,000. Gaston asks $30,000 for the equipment but sells the equipment for $26,000. Which of the following would not be part of the journal entry to record the disposal of the equipment?
A. Debit Accumulated Depreciation $61,000.
B. Credit Equipment $90,500.
C. Debit Loss on Disposal of Equipment $3,500.
D. Credit Gain on Disposal of Equipment $3,500.
E. Debit Cash $6,000.
154. Flask Company reports net sales of $4,315 million; cost of goods sold of $2,808 million; net income of $283 million; and average total assets of $2,136. Compute its total asset turnover.
A. 1.31.
B. 2.02.
C. .13.
D. .76.
E. .50.
155. Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $35,000, a building appraised at $105,000, and paddleboats appraised at $210,000. Compute the cost that should be allocated to the building.
A. $97,500.
B. $105,000.
C. $89,178.
D. $140,000.
E. $93,000.
156. Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $35,000, a building appraised at $105,000, and paddleboats appraised at $210,000. Compute the cost that should be allocated to the land.
A. $93,000.
B. $140,000.
C. $32,500.
D. $31,000.
E. $97,500.
157. Victory Company purchases office equipment at the beginning of the year at a cost of $15,000. The machine’s useful life is estimated to be 7 years with a $1,000 salvage value. The journal entry to record the first year depreciation is:
A. Debit Depreciation Expense $2,143, credit Accumulated Depreciation $2,143.
B. Debit Depreciation Expense $2,000, credit Office Equipment $2,000.
C. Debit Office Equipment $2,000, credit Accumulated Depreciation $2,000.
D. Debit Accumulated Depreciation $2,143; credit Office Equipment $2,143.
E. Debit Depreciation Expense $2,000, credit Accumulated Depreciation $2,000.
158. Victory Company purchases office equipment at the beginning of the year at a cost of $15,000. The machine’s useful life is estimated to be 7 years with a $1,000 salvage value. The book value at the end of 7 years is:
A. $2,143.
B. $1,000.
C. $2,000.
D. $14,000.
E. $0.
